EFR Involve 2014 Institutions Group Report
How can youth unemployment be decreased in the agricultural sector?
Farmer cooperatives
Institutions group: Susanne Whitford, Jolien Paalman, David Jansen, Frits Meeuwissen, Stèphanie Stapert and Iris Janssen
Acknowledgments We as the Institutions Group would like to thank all the people we have met and talked to in Uganda and who have provided us with so much valuable information. Our visits to DENIVA, the NGO Forum, FinAfrica, Makere University, Entreprise Uganda and many more were essential to the writing process of this report. Also we would like to thank Ruud en Tim from LiveBuild for helping us in our research en teaching us about the culture of Uganda.
Table of Contents Introduction ................................................................................................................................................... 4 Three possible solutions to reduce youth unemployment ........................................................................... 5
1. Farmer Cooperation ................................................................................................................. 5 2. Market demand information centre ........................................................................................ 5 3. Job Centre ................................................................................................................................. 6 Advantages and drawbacks business ideas .................................................................................. 6 Farmer cooperatives ...................................................................................................................................... 8
1. SWOT analysis........................................................................................................................... 8 2. How to set up a cooperative?................................................................................................. 13 3. How to improve an existing cooperative? .............................................................................. 15 Conclusion ................................................................................................................................................... 16
Practical recommendations to Kinderen van Uganda ................................................................ 16 Appendix...................................................................................................................................................... 17
One-pager about online job centre ............................................................................................ 17 Manual ‘How to set up a farmers’ cooperative in Uganda’ ....................................................... 18 Overview of all minutes.............................................................................................................. 19
Introduction Background This report is written in request of Kinderen van Uganda as part of the EFR Involve research project. The Involve project is an initiative of the Economic Faculty association Rotterdam (EFR) and was started three years ago as a development research project. The project offers students the opportunity to put the theoretical knowledge gained at the Erasmus University of Rotterdam into practice. In previous years separate projects in Cameroon and Ghana have focussed on water management and electricity constraints in rural areas (the research was conducted for LiveBuild). However, this year the focus of the research is the youth unemployment in Uganda, which is an economically highly relevant topic given the high levels of youth unemployment in recent years. The topic was suggested for the Involve project 2014 by their new-found partner Kinderen van Uganda (KvU). KvU is an organization that has been founded in 1995 by volunteers in the Netherlands and supports local NGO’s and organizations in Uganda. In April 2014 a group of twenty motivated bachelor 3- or master students came together in Rotterdam, The Netherlands, to start the first two months of desk research, which was followed by three weeks of field research in Uganda between the 23rd of July and the 15th of August 2014. Research question The main research question how youth unemployment can be decreased with a special focus on the agricultural sector was answered in three phases. During the first phase relevant background information on Uganda and our areas of interest, namely the economy, the labour market and the educational system, was collected. For the second two months, the group was split in three groups, such that the research question was addressed in three different, more practical research propositions that increase the likelihood that the research will be of use to KvU. The three groups focussed on Agriculture, Business and Institutions. After the completion of the desk research in the Netherlands, the field research in Uganda consisted of appointments with NGOs, micro-credit companies, the ministry of agriculture and farmer cooperatives, amongst others, in order to discuss our research question and to finally formulate practical solutions.
Three possible solutions to reduce youth unemployment As the Institution Group we have focussed on the role of (non-)governmental institutions in the process of decreasing youth unemployment. During the desk research three possible solutions emerged. A short description of the business ideas and their theoretical background to decrease youth employment in the agricultural sector will be given in the below. 1. Farmer Cooperation 80% of the Ugandan population is dependent on agriculture. The majority of those are poor subsistence farmers and peasants in rural areas. As a result of lacking information on the prevailing market prices, market trends and the remoteness of many villages, there is a very high level of exploitation of individual farmers by the local middle men, who buy up the farmers’ products. These middle men are tradesmen who buy the farmers´ crops and finalize the production process or sell them to shops and other traders. The problem is that the tradesmen are mostly informed about the prevailing market prices, while the farmers do not have access to that information before the middlemen pass their farm to buy up their crops. Furthermore, there i soften only one middle man passing each village, so that there seems to be a high dependence on the local tradesmen. Adding to this, in recent years, Uganda has seen an increase in the pressure from middlemen from Kenya. They come to Uganda to buy the crops at a very low price and take the products back to Uganda to finalize the production process ( for example to roasting of coffee beans) which adds a lot of value to the product. Thus, the Kenyan middle men can ask a higher price for the final product. A possible solution to this problem can be to bring different farmers of the same crop together in order to unite them in a cooperative This cooperative can assure them a stable income by setting up relationships with companies and institutions that will buy their products. The cooperative can pool and store the products and sell them at a time when the market price is most favourable. To prevent them from selling their products quickly to a middle man right after harvest, as a consequence of the high need for short term profits, the cooperative will pay them a year round salary. This salary is higher because products can be sold in periods of less supply and higher demand, in exchange for the guarantee that the farmer will sell its products to the cooperative. The cooperative can also help to increase the crop yield as well as the quality of the crops by providing trainings to help the farmers to see their farm as a business and to increase their income, given to seasons and good agricultural conditions in Uganda. 2. Market demand information centre Having one of the highest start-up rates in the world, Uganda shows a lot of entrepreneurial potential. However, many people will see their company fail soon again, as a consequence of lacking business management skills, such as knowledge about book keeping, IT, as well as financial and general management. Part of the problem is that companies are neither started as a response to the demand in the market for the products that they sell, nor do they distinguish themselves from the other businesses around. Thus, an information centre can provide potential
entrepreneurs in a village with market information and help them to find a business for which there is sufficient market demand. In this way, a diverse market will arise in which diversified businesses will focus on different products. The information centre will not only provide the potential entrepreneurs with necessary market information, but also help them with training to get the necessary skills required in order to turn their business into a success. 3. Job Centre Each year 40,000 students graduate from the Makere University, while only about 8000 jobs are offered (George Batu, 29/07). Most unemployed people look for job placements in the newspapers, however, due the excess demand for jobs, many available job positions have already been filled by the time the newspapers are sold. Next to the newspapers there is no central database with available jobs, which people can access online and which is continuously updated, presenting the latest job openings in certain areas. Furthermore, there are also no physical job centres, where unemployed people can register and leave their profile in the database of the job centre. When jobs become available, a job centre could create a match with suitable job-seekers that are in their database. The job centre would also be involved in providing training for the unemployed on topics such as the job screening and application process, as well as interview trainings and trainings on how to present and market yourself. Advantages and drawbacks business ideas The next section will present the advantages and drawbacks of each business idea. With respect to the farmer cooperative, the spread and distribution of information is facilitated compared to reaching out to individual farmers in remote villages. In addition to that, a group of farmers can enjoy a better negotiation position and more market power. A group of farmers can also achieve higher levels of trust and commitment, as they are aiming for a common goal and are mostly socially connected already prior to the establishment of the cooperative. Farmers who join the cooperative have to be local farmers with some knowledge about business skills. Hence, there seem to be several direct impacts and positive results from the farmer cooperative. Nevertheless, a farmer cooperative can still be used to exploit farmers if there is a low level of trust, which is quite difficult to enforce among the participants. Furthermore, there is a high need for structure and organization, which Ugandans seem to find difficult to establish, so that it can be difficult to set up a cooperative. In addition to that, one has to be cautious about the high levels of corruptions present in the country. Next to a farmer cooperative where all members are equally treated and have the same responsibility, there is also the possibility to elect a local farmer to be the leader of the cooperative, who has an entrepreneurial business mind, carries the interest of the farmers and represents the cooperative as a business. Having a leader of the cooperative, who is preferably a neighbouring farmer, is more sustainable and the farmers have to trust one strong farmer instead of all the other members at the same time. Given that the leader earns money of the other farmers and coordinates their savings, the farmers have to trust him and he has to establish the trust by helping them out during times of financial trouble for instance. However, it is difficult to
find a capable, trustworthy entrepreneurial farmer with the ability to lead the cooperative. The most common constraint of cooperatives is the lack of starting and working capital, so that it is tough for the farmers to handle certain advance payments. Overall, the farmer cooperative can ensure better quality of the products, which results in a better reputation of the products sold, so that it can possibly stabilize the prices in the long term. With respect to the second business idea, the market demand information centre, there are many advantages it can offer, especially to local farmers. The market demand information centre can provide better feedback and knowledge about the quality and value of their product sold and help to increase the quality of their product. Furthermore, the centre can offer knowledge and information about the market prices for farmers, so that farmers could adjust their prices more towards market standarts. In addition to that, the centre can provide information about the benefits of storing the harvest in a warehouse, until supply has dropped and the demand and market price for the crop have risen. Moreover, the centre can support the farmers to diversify their livelihood, so that they become less dependent on the middlemen, who purchase their crops. This transfer of knowledge is especially beneficial in the long term if the information provided by the centre to the farmers will be passed on to neighbouring farmers and their children. In addition to that, local farmers can receive information via SMS or radio about upcoming weather conditions, which fertilizers work best etc. in order to achieve a better harvest. Similar to the drawbacks of the farmer cooperative, trust is also a constraint for the information centre, because the local population is not very prone of changes. Hence, it is difficult to make local people change their actual behaviour and habits, for example convincing farmers to plant other crops then they normally do. Additionally, it is difficult to reach individual farmers in remote villages, who receive most information per SMS or the radio. In order to ensure continuously high levels of trust of the local people and a good reputation of the information centre, the information provided by the centre has to be up-to date at all times. It is very difficult to screen and verify the CV’s and applications of applicants, so that the job centre and database would work best if they were linked to the university to ensure that the applicants are high quality students. Many poor people especially in the rural areas do not have access to the internet and there is a high rate of illiteracy among them, so that mostly people in urban areas with a certain level of education could benefit from an (online) database of job openings and a job centre. Taking all the advantages and drawback of the job centre into account, we have decided to drop the third business idea of the job centre and a central job database for several reasons. Most importantly, even though there is a high need for a central database of available jobs, this business idea is less relevant for our research partner, KvU, Kinderen van Uganda. Next to that it is unlikely that job centres would work in the villages because of oversupply of labour, low education levels and the overall lack of available jobs, so that only the idea of an online central database of available jobs seems to be feasible. However the lack of sufficient supply of jobs makes it very difficult to match educated young people with open job positions. Given the difficulties of verifying the CVs of applicants, young people have to proof themselves to companies by doing an
unpaid internship in order to show their abilities and commitment to the work. Nevertheless, this business idea can be a good starting point for students of the Makere University Business School (MUBS) to work it out in more detail, possibly with the help and guidance of FinAfrica. A more detailed description of the business idea concerning an online jobdatabase can be found in the Appendix. The following analysis will thus focus on farmer cooperative, since we believe that this business idea is the most feasible and beneficial one in order to decrease youth unemployment in the future. As described before, a farmer cooperative can help to stabilize prices and rise the income of farmers, so that we hope that agriculture will become more popular among young people. This would lower the pressure of the excess demand for jobs and the need to match job seekers and employers in urban areas. The market demand centre is one step ahead since the way to communicate with the farmers to spread the information can be done through the farmer cooperative. The farmer cooperative will thus facilitate the spread of information and the access to it. We will come back to the Market Information Centre later when combining it with the farmer cooperative.
Farmer cooperatives SWOT analysis In this chapter we will perform a SWOT analysis, in which the Strengths, Weaknesses, Opportunities and Threats of a farmer cooperative will be uncovered. We assume that the cooperative to which these characteristics apply, is a cooperative that is a well functioning and somewhat developed cooperative. This means that the right structure, as offered in the chapter ‘how to set up a cooperative’ is in place and that the improvements mentioned under ‘how to improve a cooperative’, such as the availability of trainings, have been made. The cooperative is thus somewhat developed, but it does not have to be very large. To such a cooperative, the strengths, weaknesses, opportunities and threats listed below have to be considered.
Weaknesses Strengths 1. Favourable agricultural conditions 2. Collective voice 3. Democratic structure 4. Way to cut out the middleman 5. Easier spread of market information to individual farmers 6. Market power 7. Offer professional trainings to all farmers 8. Provide social and economic security
1. Distrust towards cooperatives 2. Starting capital 3. Slow progress 4. High need for short term capital
Opportunities
Threats
1. Diversity of products 2. Increase export by profiting from a stronger market in the East African Federation 3. Increased access to market information for invidual farmers 4. Benefit from the mandatory internships for students 5. Improved access to inputs 6. Use advanced means of treating their crops against diseases 7. Benefit from economies of scale with other farmer cooperatives 8. Become involved in value adding activities, higher in the value chain 9. Increased access to world market 10. Presence of financial services for individual farmers 11. Use stored harvest as collateral for loans
1. Government will try to destroy the organization once it becomes too powerful 2. Cooperatives are used for political means, and trust will be destroyed 3. Diminishing fertility of the soil and climate change 4. Mismanagement of funds and misuse of power of administration of a cooperative 5. Political, economic and social instability in the country 6. Threat of middle men
Strengths: 1. Favourable agricultural conditions 2. Collective voice 3. Democratic structure 4. Way to cut out the middleman 5. Easier spread of market information to individual farmers 6. Market power 7. Offer professional trainings to all farmers 8. Provide social and economic security Strengths 1. Favourable agricultural conditions The Ugandan soil has always been very fertile. That is a great benefit since this means that crops will grow easily. Furthermore, weather conditions are good. Besides, there is a lot of unused land in the villages. 2. Collective voice When grouped together, the cooperative can have more impact on political, social and economic level. The cooperative can have a voice in the parish or district discussions on politics. 3. Democratic structure Farmers do not want to be exploited. A middleman can exploit the farmers by giving a low price.Farmers do not like the hierarchy if they cannot choose thirselves who will be their leader. A democratic structure contributes to equality. 4. Way to cut out the middleman The farmers in the cooperative together can buy or rent a truck to transport their harvest and sell directly to the markets in the city instead of selling to the middleman for lower prices.. 5. Easier spread of market information to individual farmers The cooperative can share information on weather conditions and possible fertilizers so the harvest will be bigger. 6. Market power The market power increases when selling with a group instead of selling your own harvest. Even if the cooperation can not affort to rent a truck to bring their harvest directly to the city-markets, your negotiation position still improves because of the fact that you discuss selling prices with the farmer groups all together. The cooperative can work together with people in the city and call for current market prices for example. The farmers can thus gain more profit if they know the real prices in the city. Some people even say that the seller now decides the price instead of the buyer. That is of course not true in all cases, but at least the farmers have gained more power as sellers. - Exploitation of economies of scale You can decide to buy part of a truck (to transfer your goods) with your farmers group which is way more beneficial than buying a part of the truck on your own. Furthermore, you can buy fertilizers in bigger loads when using it with the whole group.
-
Increase the quality of the product When you work together with other farmers and share information, the quality of your product can increase. The result is that the demand market for better products is bigger so there is enough demand. 7. Offer professional trainings to all farmers Many farmers are ignorant of the possibilities of their farm. Not only are they often unaware of the value of their products, but also of the quality the prevailing market price and on treatment of their crops. With adequate trainings, farmers could be taught to think more as a business man or woman and to raise their earning by delivering a better product. Constant change is necessary to create a product that is marketable and for this innovation through knowledge supply is necessary. a. - Use irrigation and fertilizer to make the ground more fertile The soil of Uganda has always been said to be very fertile. Due to intensive cropping over the past decades, many farmers notice that their soil has become less fertile and that yield of their ground has fallen. In order to reverse this process, it is necessary to make use of fertilizers that are suitable for the Ugandan climate. Another problem is that farmer are often far away from a water source so that they depend totally on rainfall to water their crops. With improved irrigation systems farmer wouldn’t solely have to rely on rainfall. 8. Provide social and economic security Sometimes it is better to wait a few weeks before you sell your harvest. However, some farmers really need money immediately and sell their harvest against a low price due to necessity. When there is a savings account, farmers can be paid in advance and the harvest can be sold later at a higher price. Weaknesses: 1. Distrust towards cooperatives 2. Starting capital 3. Slow progress 4. High need for short term capital Weaknesses 1. Distrust towards cooperative There is a lot of distrust from farmers against cooperative. There are farmers who fear cooperative because of political issues that happened years before. Candidates for president promoted and promised cooperative to get more money when they voted in favour of the candidate. However, when the cooperative became too big, the government tackled them down because they were scared that the cooperative would be too powerful. The candidates used the farmers as marionettes to gain more votes. Therefore there is a lot of distrust against cooperatives. 2. Starting capital Ideally you want to pay the farmers in advance. So you can keep the harvest for some time and sell it at the market when the price is optimal. To do so, you need capital. Farmers normally don’t have savings, so they can’t wait with selling their harvest until an optimal
price is reached. They have to sell directly to the market for a lower price. Starting capital is therefore needed but hard to find in Uganda, high interest rates are normal and farmers mostly don’t have some collateral to assure the bank that the money is coming back. 3. Slow progress It takes a long time before farmers start to see the benefits of a cooperative. People are not easily willing to change crops or add another crop to earn money. You really need to prove and show them you are right. Besides, the trust issue is so big that it takes a lot of time before farmers will step into the cooperative. Furthermore, the increase of the harvest takes a long time as well since farmers will stick as long as possible to their own habits. This means that the increase of profit is a slow process as well. 4. Fear of times of financial stress will lead to high need for short term capital The middlemen can and may exploit the farmers in times of financial stress, this can be prevented by a saving initiative. The farmer group is still a very small group on the market, they do not make a difference on the market in the capital city for example. Also, they have relatively small market power, the international market can’t be influenced for example. Most of the times they cannot fill a whole truck, because they don’t have enough harvest; the truck will be partly empty. They need to work together with other farmer groups that are a member of the same coorperative. In this way costs can be shared and a saving initiative can be started to eliminate the problem of the middle man who wants to make advantage of the farmers. However, the trust issue is a problem when working together with another group. Opportunities: 1. Diversity of products 2. Increase export by profiting from a stronger market in the East African Federation 3. Increased access to market information for invidual farmers 4. Benefit from the mandatory internships for students 5. Improved access to inputs 6. Use advanced means of treating their crops against diseases 7. Benefit from economies of scale with other farmer cooperatives 8. Become involved in value adding activities, higher in the value chain 9. Increased access to world market 10. Presence of financial services for individual farmers 11. Use stored harvest as collateral for loans Opportunities 1. Diversity of products There is a benefit in multiple commodity trading, since individual farmers are less dependent on the middlemen, have more security and a constant flow of income if they grow multiple crops for the commodity market. It’s important that the farmers diversify their crops, the cooperative should still focus on one specific crop. When there is a middleman, he has no interest in pushing the farmers to grow various crops. Hence people on a farm often depend on only one crop for the commodity market. They have some other crops but this is used for their own consumption. Once they are a member of a
cooperative, they are more open to growing other crops since the cooperative will advise them to do so. This variety makes them less dependent on the value of the only crop. Besides, they have incomes at different times. 2. Increase export by profiting from a stronger market in the East African Federation With the introduction of a common market for goods, labour and capital in 2010 the East African Federation, a large market has opened up to which products can be exported. There are great exporting opportunities in this emerging market that combines the markets of Burundi, Kenya, Rwanda, Tanzania and Uganda (East African Community, 2014) (Cristopher, 06-08-2014). 3. Increased access to market information for invidual farmers In order to create continious loyalty to the cooperative and to combat the temptation of the middleman that offers advance payments, an information system could be introduced that reaches farmers directly, for example via mobile phones. This will not only keep them commited but can also provide them with vital information for their business. Weather forecasts, climate change, scheduled trainings as well as price fluctuations could be transferred by the market information center. With this information all farmers can directly act on changes in the market and the environment. 4. Benefit from the mandatory internships for students Create internship opportunities for students from argicultural vocational training centers as well as students from Universities, as a result the cooperative will benefit from the knowledge of the students and students will benefit from a usefull internship. In the current situation there are on the one hand, farmer's cooperative who often lack sufficient access to information and have difficulty in providing suitable trainings. On the other hand there is a great need for internship opportunities for the students of Makerere University (Batu, 29-072014). When we combine these two facts a wonderful exchange could take place. The cooperative gains access to information through the university student and the university student has a valuable learning experience. 5. Improved access to inputs Means to improve the quality and quantity of the crops are often hard to come by for farmers in a village. When they would be able to use for example fertilizers or vaccines and treatments such as pesticides, which are necessary to avoid losing (part of) the harvest, they would be able to improve their product significantly. When a shop would be accessible for the farmers where they can buy such inputs, this would mean a step forward on the way to commercialization of their business (Bucyanyandi, 11-08-2014). 6. Use advanced means of treating their crops against diseases As anywhere in the world, Ugandan farmer are faced with deceases that threaten their crops and livestock. Vaccines and treatments such as pesticides are necessary to avoid losing (part of) the harvest (Bucyanyandi, 11-08-2014). Cooperatives should provide means of treating their crops against diseases and give vocational training in prevending diseases. 7. Benefit from economies of scale with other farmer cooperative The best solution would be to create an umbrella organization for farmers cooperatives to facilitate the exchange of knowledge, create a collective voices and to combine efforts in marketing, training, management etc an umbrella organization could be created of which all farmer cooperative become a member. This organization could also perform as a research and training center that provides information and trainings to its members.
8. Become involved in value adding activities, higher in the value chain Most agricultural products that are sold out of Uganda today are raw products, to which hardly any value has been added. If farmer cooperatives would focus on first added value to product of their farmers they would move up the value chain and gain a much higher profit. The profit made by adding value is then not collected by the country that the product is exported to, but by the cooperatives and thus the Ugandan farmers themselves. 9. Increased access to world market Globalization is a development that also influences Uganda. In general it has become much more easy to transport goods all over the world and to trade with many partners. This provides a good opportunity for Uganda, since the growth of the world population creates a greater demand for food. As a country whose economy agriculture plays an important role, Uganda could benefit from this development greatly. 10. Presence of financial services for individual farmers The most important problems in the lives of individual farmers are financial ones. The immediate need for cash to solve short term problems and the temptation to get this cash from the middle man is a weakness of cooperative. This weakness can be tackled if farmers have access to a financial service centre, where they can save in times of prosperity and borrow in time of financial distress. If such organizations were present, farmers would be much more likely to stay loyal to the cooperative. 11. Use stored harvest as collateral for loans In order to create more value for example by stepping up the value chain, but also to realize some other opportunities, the cooperative needs access to loans, form either financial institutions or NGOs. When the harvest is bought from the farmers and temporarily stored, this could serve as collateral. With this as a guarantee towards the provider of the loan, the cooperative gains access to the financial means that it needs to grow. Threats: 1. Government will try to destroy the organization once it becomes too powerful 2. Cooperatives are used for political means, and trust will be destroyed 3. Diminishing fertility of the soil and climate change 4. Mismanagement of funds and misuse of power of administration of a cooperative 5. Political, economic and social instability in the country 6. Threat of middle men Threats 1. Government will try to destroy the organization once it becomes too powerful. The risk for the government, when cooperative are successful, is that they will start operating at a district and national level and will want to influence politics. If they become too powerful the government will try to destroy the cooperative. 2. Cooperatives are used for political means, and trust will be destroyed. In the past Uganda knew many successful farmer cooperatives, which were however destroyed by politicians when they started using the cooperatives to influence its members politically. Since the cooperatives are in an ideal situation capable of reaching many people, people can misuse the
cooperative to communicate a message. The farmers will feel betrayed by the cooperative, if this happens and will lose trust in it, after which the organization will fall apart (Kahiigwa, 31-07-2014). 3. Diminishing fertility of the soil and climate change One of the strengths of Ugandan farmers is that they work of very fertile ground in a climate that is very suitable for agriculture. Due to intensive use of soil for many years and few knowledge on how to treat the soil, many plots of land have become much less fertile over the years. This has led to a decrease in yearly harvest. 4. Mismanagement of funds and misuse of power of administration of a cooperative Corruption is a vice that is omnipresent in Uganda. Corruption and mismanagement therefore pose a great threat to the sustainability of farmer cooperatives. When large sums of money become involved in a somewhat bigger and more experienced cooperative the risk of fraud becomes bigger. 5. Political, economic and social instability in the country With national elections coming up in 2016, there will be a period of uncertainty as for the political course of the country. In the past three decades Uganda has been a quite stable country, but it has known period of severe turbulence before that. Furthermore, Uganda is surrounded by a lot of instable neighbouring countries and it is not sure what will happen over there. 6. Threat of middle men When farmers are really out of money and the middleman passes by, the farmer will often sell (part of) the harvest to the middleman. The middleman triggers the farmer to sell it immediately and pretends like he is offering a high price. Furthermore, the middleman comes by to set a fixed price for harvest that is not ready yet. When the price of the product increases, you as a farmer still get the fixed price and you miss a lot of profit. How to set up a cooperative? In this chapter, we will discuss what is the best way to set up a cooperative. In order to set up a cooperative one has to start by forming farmers groups on the village level. The use of the farmer group is to create a local social environment in which farmers support each other and through which communication with the cooperative is facilitated. The farmer groups are organized groups of 10-30 farmers, which have a clear democratic structure, which ensures equality among the farmers, as well as accountability and the prevention of fraud. Each farmer group elects a board which consists of a chairman, a treasurer and a secretary. Board members should operate independently in the best interest of the farmer group, while they control each others' actions. The role of the chairman is to guide the farmer group and it is critical that he always represents the common interest of the group. The elected chairman should be a strong natural leader, who is preferably schooled and has sufficient knowledge of the English language. Most importantly, the chairman has to have the trust of the other farmers. Moreover, the chairman needs to have a long-term vision and communicate this to the farmers. The chairman informs the farmers in his group about the strengths of the cooperative, such as the exploitation of economies of scale. He also should inform them about the opportunities that present themselves, such as retaining crops after harvest, to sell at a higher price later, when demand for the crops has risen.
Another function of the chairman is to make the farmers aware of the disadvantages of selling their crops to the local middlemen. Making farmers aware about the harm in selling to the middle men is essential, which would lead to the loss of economies of scale and would weaken the position of the cooperative. Both decreases the personal income of the individual farmer. Vision Statement: An Ugandan agricultural sector free of exploitation by middle men, offering sufficient jobs to eradicate youth unemployment. Mission Statement: To stabilize farmers income at a higher level through easier access to market information and agricultural trainings for all members resulting in an improved negotiation position. Savings and Credit sytem in an cooperative It is advisable to start saving from the first harvest onwards. The possibility to smooth income will help the farmers to overcome financial distress resulting from the seasonality of their crops, as well as short term needs for money due to the sickness of a child, for instance. The joint incentive to save will enable the farmer group to purchase equipment and material that will add value to the crops. An early saving scheme in combination with a savings account will facilitate the formation of the farmer groups into a cooperative later and it provides financial security to its members. One of the main reasons Ugandan farmers are selling to the middlemen is the quick cash middlemen can provide. Farmers might need this fast liquidity for several reasons, such as a sick child, a failed harvest, maintenance on housing or direct need of nutrition. To ensure that these emergency cases do not force the sale of crops to middlemen, a monetary safety net should be developed. The savings/credit system has two main goals. The first has been mentioned above and is the most important reason: to ensure the liquidity of farmers within the cooperative in case of emergencies. The second goal is to provide capital to the cooperative, from which they can grow and make investments that benefit the members. Both purposes are vital for a healthy cooperative and to ensure long term growth. One side effect a shared savings account might be an increase dependence of individuals on the group, hence enlarging commitment towards the cooperative and the common interest. However, this should not be a goal on itself. The idea of the savings account is that if every individual saves a small portion of their income, they will accumulate towards a larger fund that serves as the safety net required by the society. Since only occasionally a farmer will make a claim on the fund, the small individual savings together will be sufficient to cope with emergencies. The system should work as follows. A certain percentage of the income generated from sold crops is saved in a general account that is managed by the treasurer. He divides the retained earnings
between a savings account and a capital account, while giving priority to the savings account. When someone requests credit for emergency situations, the treasurer decides together with a democratically appointed committee. Once the farmer group has been formed and is well functioning, the chairman is responsible to actively look for other farmer groups or partners, such as large farms or export partners, in order to connect with them. Next to the link with other existing farmer groups, the chairman should also seek the set up of new farmer groups by visiting villages to encourage farmers to join together to a farmer group, which creates economies of scale and the transfer of knowledge. Once the connections between the farmer groups have been achieved, they can come together to form a cooperative. The different chairmen of the farmer groups carry the main responsibility to realize the creation of the cooperative. The cooperative will operate at the level above the farmer groups (village level/parish level etc.) A well-functioning cooperative should comply with the following standards: 1. Good Governance: 1. A General Members Assembly should be organized yearly. During the meetings the financial statements are discussed in order to create transparency. Furthermore, at the start of every new term the board is elected democratically at the general member assembly, which has to account for the actions they are taking. Additionally, the long term strategies for the cooperative should be discussed during the meeting. 2. The cooperative has to comply with basic guidelines of the vision and mission (see above). All actions of the cooperative should be in the best interest of all individual farmers. 3. The board will try to reap all benefits of larger economies of scale and exchange of information, since a larger collective voice is created. How to improve an existing cooperative? After having set up a stable cooperative, there are always possibilities to improve and that is what this chapter is about. In an ideal situation, the board members are suited for the positions they take. Furthermore the board will be a reflexion of the group of farmers they represent. An existing cooperative can be improved by offering trainings to farmer groups in which all farmers of the group can participate. The farmers should be taught on subjects such as pesticides, techniques to keep the ground fertile, value addition to increase the product quality and general farming techniques. These trainings have to reach out to the farmers directly.Trainings concerning value addition can cover the improvement of the product quality and ways to move up the value chain following initial invesments. The former aims at value addition by providing information about planting crops in rows, drying and roasting coffee beans instead of selling them in raw state and drying them without mixing dirt and stones under them for instance. The latter refers to value addition
by moving up the value chain which requires an initial investement. Examples could be to get agricultural trainers from SIAPROM or the inclusion of agricultural students who can do their internship at the farmer group. Another improvement of an existing cooperative can be the promotion of the active involvement of the individual members. Furthermore saving initiatives can be improved such as to save part of the profit and to raise external capital, which would be a long term goal. In addition to the improvements mentioned above, the set up of a Market Information Centre could greatly benefit the farmer cooperative. The market information center can pass information about weather conditions, market prices and their fluctuations, agricultural techniques and much more to the chairmen who then pass on that information to the farmers directly during the meetings. Furthermore the market information centre can inform the farers about news and strengthens the loyalty. The communication channel used to transfer the information and news would be group text messaging to all the chairmen.
Conclusion Practical recommendations to Kinderen van Uganda -
Distribute the report to farmers Because of KvU´s presence in the Kibinge area they have build a strong relationship with the population there. KvU could use these connections to distribute this report about farmer´s cooperatives to people whom it may be of help. They will be familiar with the already existing cooperatives that could profit by reading about how they can improve their cooperative and what opportunities and threats are out there. Furthermore, KvU might be familiar with farmers that would want to set up a farmer´s cooperative and that could use our manual to do so.
-
Translate the manual into Luagandan Many people in Uganda speak English and will be able to read our report. However, for farmers in the villages who might put it to practice it will not always be the case that they can read and understand English. Therefore, it could be nice to see whether the report could be translated into Luagandan, for that is the language that most people speak.
-
Incorporate classes about farmer cooperatives into the curriculum of farming schools such as SIAPROM In order to encourage the widespread initiation of farmer groups and cooperatives throughout the country, it is important to teach young people about the benefits of cooperatives and how they can participate in them. We would therefore like to see classes about farmer´s cooperatives incorporated into the curriculum at (vocational) farming schools such as SIAPROM. A combination of the skills and knowledge that they have gained as well as the respect that they will received as educated people when they return to their village makes them very well suited to set up a farmer group in their village and serve as its chairman.
-
Help existing cooperatives to improve their organization and to benefit from the opportunities. Especially in the field of international trade and marketing. Because of KvU’s experience and knowledge of the situation in Uganda but also in the western world, they can be a partner to farmers’ cooperatives that are in a somewhat more evolved state. These cooperatives need to look at opportunities to grow and improve their organization. They can do so by looking at our SWOT analyses. KvU could help to identify relevant opportunities and threats and work on a plan on how to exploit the opportunities and avoid the threats. Especially in the field on international trade and marketing of their product KvU can prove to be of much help.
-
Have local partners look for farmers that could set up farmer groups in villages. Kinderen van Uganda will mainly act as the connector here. In order to promote the initiation of farmers’ cooperatives in the Kibinge area, KvU could look for suitable farmers that could set op farmer groups. It is important to use the local
partners that KvU already has to do this, since they know the people in the area well and are trusted. KvU should not have a share in the farmers’ cooperatives, but it can help to find people that are most suited to start new cooperatives.
Appendix 1 One-pager about online job centre Each year 40,000 students graduate from the Makere University, while only about 8000 jobs are offered. Most unemployed people look for job placements in the newspapers, however, due the excess demand for jobs, many available job positions have already been filled by the time the newspapers are sold. Also, there is a lot of nepotism in Uganda, therefore a lot of jobs are actually already filled even when the company still needs to put the job placement in the newspaper. Next to the newspapers there is no official central database with all available jobs, which people can access online and which is continuously updated, presenting the latest job openings in certain areas first. Furthermore, there are also no physical job centres, where unemployed people can register and leave their profile in the database of the job centre. In many countries around the world, such job centers are being use, to create a match when jobs become available for which suitable people are in the database, Such centers do not exist in Uganda. As described earlier, there is the need for a central online database for job openings, starting positions and internships, and a physical job centre. Nevertheless the online database would only work well when set up in Kampala, since many people in other area lack access to internet. Furthermore, it will benefit only educated people and not the low-skilled workers. In addition to that the demand for highly educated people is much lower than the supply and there are only very few jobs available, which can be matched every year. However there seems to be a very high demand for low skilled jobs, which most people can do (Douwe, 28/07). There also seems to be a problem with finding the ‘best’ candidate for a high-skilled job. Even when the companies have a lot of choice, they also don’t have access to a database with CV’s. (Agume Bless, 29/07) It is very difficult to screen and verify the CV’s and applications of applicants, so that the job centre and database would work best if they were linked to the university to ensure that the applicants are high quality students. Many poor people especially in the rural areas do not have access to the internet and there is a high rate of illiteracy among them, so that mostly people in urban areas with a certain level of education could benefit from an online database of job openings. In the long term it then would be possible to connect the website to other universities so that there is a big network of students which can be accessed by companies and by students. Even when at first only the Makere University will participate in this project there are enough students with different backgrounds who find a job. A possible solution to set up this database is to find IT students from Makarere University who can work together with the university to set this up. There has to be a website at first, where people can log in to and fill out different forms including an online CV, personal letter and a motivation letter. Also, the university has to participate in the process of some sort of control to check and screen whether the student actually did study at the university. Before a profile comes online, this has to be verified.
Appendix 2 Manual ‘How to set up a farmers’ cooperative in Uganda’ Step1 Find a few farmers in your village that grow the same crop as you do, and for which you would like to start a cooperative. These farmers should (get to) know each other well and trust you completely. In order to do this, you have to meet once every month. During harvest time you will gather the harvest of all the individual farmers. Make sure that it is recorded how much everyone has harvested. In order to get a good price for you product there are three possiblities: 1. Try to contact multiple possible buyers. If you know what different prices they offer, you will have a better position to negotiate a good price. 2. Wait with the sale of your harvest until the price rises. In the period immideately after harvest there will be a great supply of your good, since all farmers have just harvested. If you wait a bit longer, the supply will drop, which makes the price rise. Thus you can sell your harvest for a better price. 3. You could together with the cooperative rent a truck. By all putting in a small amount of money, you can simply raise your price by directly selling to the market. After selling you will pay the farmers that contributed their harvest, their share of revenue. It is wise to start saving part of your revenue already from the first harvest onwards. You have to do this on a shared bank account. In step 5.a it will be explained how a more advanced financial service center can be introduced. Step2 Find more farmers in your village and show them what you have done in the previous harvest(s). If you show them that together you have a better position you can convince them to join the farmer group. A well working farmer group will have between 10 and 30 members. It is important now to formalize the functioning of the group. There will have to be chosen a chairman, secretary and treasurer. This is a democratic process in which every member of the group has one vote. The roles of the different members will be as follows. Chairman: Responsible for the overall functioning of the group, contact with other groups Secretary: Registers all members, stays in contact with them and plans meetings Treasurer: Registers the sale of harvest, pays out the members after sales Step3 After the farm group in the village works well, the chairman of the farm group will look for other farm groups in nearby villages. If these do not exist, he will encourage and help with the start of such a group. Preferably this happens in several villages, within the same parish, at the same time. During harvest time it might be possible to combine the harvest of the different farmer groups and sell together. The two possibilities to get a good price for the harvest that are mentioned in step 1, can be applied. Step4 Once several villages in a parish have a functioning farmer group it is time to set up the
cooperative. The cooperative will unite the different farmer groups and should comply with the following rules. 1. A board is chosen every couple of years, with at least an chairman, secretary and treasurer. They will create a long-term strategy which they will try to execute during their term. 2. There will be a General Members Assembly every year, where the financial statements are discussed in order to create transparency and where the board has to account for the actions they are taking and the progress of their long-term strategy. The cooperative will now collectively sell the harvest of all the farmers in the farmer groups, and thus a better negotiation position is achieved. The following steps do not have to be taken in this order. They are all improvements that have to be made to evolve the basic cooperative into a better functioning one Step5.a Once the cooperative has been started, it is time to educate the farmers and improve on the quality of the product. When the quality of the product is better, the price at which you will be able to sell is higher. To achieve a better quality, the farmers will participate in trainings. These can be offered by experienced farmers from within or outside of the community. It is important to show the results of the advised techniques directly to the farmers. Only if they can see the result with their own eyes, you can convince them to change the way the handle their products. Step5.b In order to help the farmers to be financially responsible and to provide them with resources in times of financial distress a financial service center can be set up. Here it will be possible to safe the money that the farmers don’t immediately need after harvest. Also it is possible to get a loan here if necessary. These financial services will help the farmers to be less vulnerable to sudden expense that they cannot afford, which otherwise could induce them to take credit with bad conditions from middlemen. It would also be possible to invest in or temporarily lend the savings to the cooperative, so that it can grow.
Appendix 3 Overview of all minutes 28/07- Douwe (Livebuild) Douwe started Livebuild in 2006, after that he worked with them for 7 years. In march 2013, he came to Uganda and became the CFO of Brood. Brood is a lunchcorner in Uganda, Ruwanda, Amsterdam and in The Hague. Next to that they supply restaurants. Douwe himself is also expanding to Uganda. On the side he has a non-registered company as accountant. But he also has an accountancy company for small and medium sized companies which now has a turnover of 5000 euros per month, he expects it to grow. He thinks his company will grow because of the mouth to mouth marketing. Cooperative The cooperative is also a good idea. There’s a lot of distrust, also towards the NGOs. It is probably hard to set up because of the lack of trust. With Brood there are less trust issues, since the employees and suppliers are dependent on them, the orders they place are quite big. Therefore the buyer and the seller can’t afford to not keep up with their agreement. Dependency is important. Job centre If there are jobs, they are for very low skilled, so basically everyone can fill them. The job center is not a good idea, because there is nothing to match them to. There are no jobs. If you want to do it, you should start a big farm and give people jobs there. You should not try to change what people grow. According to him the information centre was the best idea. Us: combine giving information to new potential entrepreneurs but also existing entrepreneurs. Difficult: starting a new farms, are people that have inherited it from their parents, so they won’t change their crops. Could the centre also provide information, or give trainings. Market information centre Douwe thinks that the information center is the best idea, because some other NGO’s do this as well. The ‘one acre fund’, would be interesting to figure out. After looking this up we found that they don’t operate in Uganda. Also, it would be nice to follow up on something that already exists, since a lot of plans will probably not be implemented. When you follow up on an existing idea, the ideas will be used more likely and are then more substantial. Talking and trust is very important. The first two and three years have to be just about talking and being there to gain their trust. Right now entrepreneurship is started because of necessity. It would be better to start with a really big farm that employs other people, because not everyone wants to be an entrepreneur and can be an entrepreneur. It is difficult to start a big business because of tax regulation. So you have to take a lawyer for this. Once a company is small you don’t have to give taxes, but when you revenue is higher it is difficult. A lot of companies who are doing well lack to keep up their tax registrations and administration. Therefore they get a big fine after a few years and the company goes bankrupt.
You should avoid hierarchy, always stay close to the farmers. He saidhe will go out of Uganda during the elections because he expects people to die. Kenya has improved more than Uganda. There is a lot of corruption: treasurers of NGO’s walking away with money. About the Youth Capital Venture Fund he had only heard negative sounds. His idea about marketing is that social marketing (talking to them) is the best idea. It is possible through NGO, but especially for a cooperative the farmers should determine their group leader themselves. 29/07- Agumé Bless (FinAfrica) Cooperative There is a political aspect to it, in the past they were used to influence farmers. There are attempts for cooperatives, but not very succesfull. Farmers are fearfull of cooperatives. Change the word cooperative to association. It is better to have an individual leader, who acts as the middle man and has to carry the interest of the farmers. He has to do it also because he sees a business opportunity. You should pay higher than middle man. Contract farming is important. If you can stabilize the prices that adds a lot of value. You have to be a friend of the farmer and Bless prefers a more entrepreneurial kind of an association. Job centre Companies don’t look for qualities in applicants, they just higher friends (or friends of friends). There is a lot of nepotism and therefore a lot of inefficiency. Supply of labour is much higher than demand. The only exception are banks, they provide internships in which they test students and afterwards can higher the best. Bless prefers not a physical but a digital job centre. According to him, you should collect information that is available and post it online. People will send in their application because they’re always looking for a (better) job. Physical job centre doesn’t work. However, CV checking is almost impossible and it is better to work with recommendations of previous jobs. Many people that are good are poached from another company by promising them a higher salary. Now people use the New Vision to look for jobs. Many jobs are already taken before they appear in the newspaper. Electronically use have a faster and constant stream of information. Many people are unaware of the opportunities. It is about making jobs known, also for rural areas they can access it now. The question remains how you can finance digital job centres. Companies will not pay, since they will get enough applicants anyway, they have market power. Students might pay. The best is to start with a fund from an NGO, later if it is successful you can charge people because you have a good reputation. Market demand information centre He once started a website that did this, it failed because he couldn’t keep up with the price
changes. They change every minute, and are different for every village even. You need to have a database of many exporters to check their prices, so that you are aware of where to get the best price. Make them compete for your product (if you have good stuff). Not only give farmers information about prices but also help them with requirements for good quality products. For a physical centre he wouldn’t know how it would work. 29/07- Joshua (Entreprise Uganda) Introduction: started as a small entrepreneur, saving small amount of pocket money. After 7 years of saving he bought a computer. Used it to type for other students. Saw he could make more money by also printing the papers. Enteprise Uganda does same as FinAfrica, but it is way bigger. They have training programmes in which 1500-2000 people participate. Large focus on empowerment and change of attitudes. There are more opportunities than working for the government. Guidance, encouragements. They reach out to the whole country. In the villages people are less risk taking, in the city students are exposed to more market opportunities. 95% of businesses that are started have not conducted research or written a business plan. Cooperatives Most get a lot of support from the government. You need a strong leader to survive. He was in favour of it. There aren’t many, but it would help to give them access to information, provide them with knowledge when they are organised better. Limitations: you have to appoint a strong leader, how do you find hem. More in favour of equal cooperation, instead of one big entrepreneurial farmer that acts as the middle man. Lack of cash is a problem with second idea. You always have to offer the best prices. (problem of 5 euro now instead of 100 later, immediate needs). Job centre Online database can work in the city. But it has to be promoted by success stories of people that have used it. There is no database yet. There are internships but they’re difficult to find on different website.
Market demand information centre Much need. Online would not work, since many don’t have access to internet and don’t go looking for information actively. Promotion of their programs Promotion/communication channels: political and local partners, radio, village meetings, market executives, churches, in schools, local coordinator. 29/07- George Batu (Makerere University Business School) George Batu is a professor at Makarere University Business school. There are 40.000 students at Makerere University. This is the biggest campus. Business School has 6 faculties. Most students are Bachelor (18-21 years) and there are slightly more women. Students come from all over the country. Number of students is growing. There are two types of paying your tuition fee. On the one hand, government can sponsor everything, because every district has a budget for scholarships. On the other hand, you can also pay yourself.
Cooperatives According to Batu, this is a good way to cut out the middle man: buy a truck with a cooperative and sell directly to the market in the city. Possibly a good idea, but let the farmers start the cooperative and not the muzungu. In past, a lot of cooperatives were taken over by the government, which resulted in a loss of trust. Gaining trust is a slow process, but it will succeed once you give proof to the farmers. Trust is the most important, use the trust that KvU has already built up. In the long run, make the livelihood of the farmers more diverse. You don’t depend on the harvest of one crop. People will be open to new things, as long as you show the direct benefit to them. This is what happened with chili and vanilla. Nowadays we even export these products. Job centre The university tries to encourage people to think about what they can do for a living. They do this by talking about it, nothing practical. Most graduates start small shops in Kampala. A lot of students have no ambition, they try to get out of the village. There is not much export, although it is growing as a business. Business clubs (membership of FinAfrica), students are not very involved in them. Very few jobs, so hard to set the centre up. Physical centre, with a lot of visible vacancies, creates false hope and would result in losing trust. Website will still create hopes, but is better. Nepotism is big. The people that have access to internet are the same as those that have access to the newspaper. Reach of newspaper is big. Sometimes companies are obliged to advertise their jobs, to avoid the notion of nepotism, but the job has already been taken. An internship is part of the Bachelor programme over here. It is obliged by the government. There is a big problem to find useful/good internships, so everything will do. University doesn’t offer internships. The students should do an internship for 16 weeks, but we cannot be selective where people go. There is no platform for internship, but there is a demand for it. Some banks do offer internships, to recruit people. Only very few people can stay with the company they interned at. A platform where big companies offer several slots of internships would be very helpful. Only there aren’t enough big companies in Kampala. It is easier to get another jobs, when you already have a job. There are a lot of people that are unemployed for the long-term. 29/07- Justus and Henry (Deniva) Deniva aims to share, provide and help with knowledge. It guids on how to get grants and it all about NGO’s and they’re the oldest network. They give out accreditation and they only give them to a couple of NGO’s. They send collective messages to the government. Furthermore, they inform the NGO’s about policies etc. Everybody puts money in, and the ones with the best business idea get the whole pot (lot of trust). They are monitoring each other and all get access to capital earlier then they would normal. It works like some kind of saving fund. Question is how they get the trust.
Cooperatives Positive reactions due to better negotiation positions and more information. Both the equal structure as the strong leader idea from Bless could work. Henry was less enthusiastic because you would need to be a part of the cooperative before you can access the information. A lot of cooperatives are being revived and according to Henry that was a good thing. Market information centre Very dependent on physical presence, people would be using it. Could such a centre give information about the climate and its changes in the harvesting period. You need to find a sustainable way to finance this. Project: one person would collect the information, so he would give the women in the perishes a phone and they would pass on the information (e.g. about the weather). Not only weather, but also prices are got by contacting the big shops in Kampala. This gets high expectations, he will tell them and they will use his prices. Farmers don’t know prices and the level of quality of their crops. 31/07 - Matthias (The Grain Council) Matthias is a program officer of the Grain Council (GC)and entrepreneur whose company focus on agriculture value adding, specialised in grain. Vision of the GC is to get all (private and governmental) parties together. The grain council is a key private sector player in the agricultural sector. According to Matthias, the current problems of the current agricultural sector are: - No advanced technology - Low quality products (low crop yied) - No demand driven production - Sector is informal - Thus: export standards are not met Start is value adding for the agricultural sector: Lack of knowledge process handling and postharvest management (often more than 40% of the harvest is lost in the process) Objectives GC: - Formalise sector (such that there is a market for the products when needed) - Regulate - Revitalization - Only 5 licenced public warehouses1 - Be more effective than the government because it’s private sector
1
The GC objectively checks warehouses on quality and hygiene and licenses the warehouses who meet the standards.
The market information centre is a great initiative according to Mathias. He thinks the phone is the most reliable communication system. The only problem is that there is a lot of illiteracy among farmers. There is a Uganda communities exchange market. Farmers can bring their product and there is a warehouse system to extend the lifetime of agricultural products. A licensed warehouse consist of a qualified inspector, a person trained for communication, an electrical system and an internet database with current products. Growth plans for warehouses are to expand from 5 to 12 and eventually 19 warehouses..Farmers can store their products for up to 6 months and sell them at better prices later after harvest. The crops also serve as collateral to financial institutions, so that farmers can take up a loan The farmers have to actively participate in the association and must have the feeling they own the association.Current problem is that farmers lack the information or the skills and the middle man are trained. Another problem is that middle men from Kenya buy products from small farmers, export them to Kenya and sell them at the world market as Kenyan products. Therefore the world sees Ugandan products as poor products, however this is not true Associations have bargain powers hence they can influence the price. There are a lot of up and downs in prices. The (near) arrival of new crops negatively influences the price of old crops Farmers can learn the real price of the crops if they have contacts in the city. The difference in maize prices past year is huge, the lowest price was 400 and the highest was 1200. Uganda does not influence the world price. Matthias vision is to regulate grains prices. The current situation is that middle man sets the prices in rural areas as an result of lack of information. Farmers cannot negotiate a higher price because the middle men simply leaves and find another farmer. Basically farmers have no market power. Thus for farmers have to be in associations to successfully negotiate higher prices.This confirms the statement Bless made. 31/07/2014- Festus Kahiigwa (NGO Forum) The National NGO Forum of Uganda is an independent platform for Ugandan national NGO’s. They look at government policies, analyze them and comment on them. The look at strengths but also weaknesses and publish advises on how they should be changed. It is their ideal to have a government that accounts for its actions and that serves the true needs of the Ugandan population. It should provide the necessary services to its citizens. One of their most prominent campaigns is the black Monday outcry, which targets corruption. The NGO Forum is a collective voices of all of it’s members. Cooperatives Within the government administration there exist district offices for agriculture. These offices have officers that are responsible for different aspects such as marketing, production, information provision and finance. Sometimes there is also a department that provides microfinance.
It is very important to form farmers cooperatives in order to have a common voice and develop a long term strategy, something that is now often missing in individual farmers. When an cooperative is too well organized however and becomes too powerful, the government might feel threatened by the cooperative. It can become a political voice that opposes the government, which is the reason why they will try to break it down. Only when the cooperative has build up capital and has a sound financial plan, they can avoid this threat of being hindered by the government. A good effort in this field was done by the Governement by the NAADS program. This we meant to educate and help the farmers and help them to become organized. There were two reasons however why the program failed in practice. The first reason was because the organization started competing with the structures that were already in place. Secondly the government used it to influence farmers politically and corruption was present. Organizational structure of cooperative It is best to start at grass ground level, within the villages. From there you can start to build the cooperatives up. The village groups will collectively represent the parish, then you continue up to the sub-county level, the district level and ideally to a national level. Currently the different cooperatives that exist are not connected to each other. It is important the start a village level because language barriers will otherwise prevent the association from reaching all farmers. Also, the people in a village know and trust each other. They can select a leader that is perhaps better educated that can perform as a spokesperson on parish level as well; he will form the connection between the two levels. The main objectives of an cooperative should be marketing and financial activities. Farmers have to set it up themselves for it will give them a feeling of purpose and ownership. Furthermore it will make the organization sustainable in the long term. It will not be easy however to change the mindset of farmer and the key to change will be to show them the direct results of change. Market demand information office There is an organization that has such a project, BRAC. It offers information on the prices of seeds, on the weather forecasts, where to buy fertilizers via mobile phone. It works very well. 31/07 - Abul Kashem (BRAC) BRAC is a foundation that was founded in Bangladesh but is currently active in many other countries as well. Since 2006 they are present in Uganda and they have their main focus on microfinance. Micro Finance There are three kinds of microfinance programs, start-up loans for micro businesses, loans to expand existing businesses and social businesses. The interest rate for all in 25% and they differ in terms of collateral, the height of the loan, payback time and whether you have to apply as a group or individual. The success rate is high, 99% pays back their loan. Connected to micro finance is the ELA program for girls, which teaches them basic skills and
gives training. Some of the girls continue in a vocational training program. Agricultural information provision The employees of BRAC that are local coordinators have contact with model farmers, whom they send information to via phone. These model farmers, who work on parish level, contact the other farmers in the villages. The reach is unclear but could be around 200.000. It is a pilot program with the World Bank. In order to become a model farmer, one has to be literate, of a certain age, be respected in the community and know a lot of people in the community. New model farmers are found be the local BRAC coordinators.The messages contain also information on health and nutrition and are send on a monthly basis. 06/08- Cristopher (friend of Henri – Deniva) It is a farmers’ association on parish level (subcounty 101). Their goal is to become a strong player on district level. They buy and process coffee, but don’t roast it. They clean it. They get 460.000 for 1 ton of coffee. If there are some stones in it, the price is already declining to 440.000. Christopher took us to a group of farmers on a village level. There are around 30 farmers in a farmers group on village level. The goal is that all farmers can send their children to a school with a good quality of education. They should have an enjoyable life and have a savings account in case of emergencies. There have been made a lot of changes since the association. First there was few harvest and now it is getting better but the process is slow. The demand market used to be too small, but if the quality of your coffee is better, it sells at a better market and there is enough demand on that market. So, there should be less stones in the coffee. Some of the farmers get an advanced payout if that is necessary. Sometimes it is better to wait two more weeks to sell your product, but the farmers can be very short of money. The association can pay in advance and then the farmers eventually get a higher price for their product instead of selling immediately out of necessity. To get more demand, it is also import to promote your product. Selling to traders directly leads to a low price. They only get 100/170. It depends on negotiation. They used to sell it raw but now we all sell dried coffee. We got support from the NGO forum which gave us trainings in drying beans. We as the association told other groups to do it as well, but they want to see proof. Before the buyer used to determine the price. Nowadays, the seller has more and more influence. The farmer group we visited exchanged information with another farmer group since they perform better. We get information about how to get a better production, for example on fertilizers. The problem is however that fertilizers are pretty expensive and most farmers can’t afford it. The farmers produce 20 kg per person per harvest. It could go to 50/60 kg, because of fertilizers. On a parish level they work together with other associations to fill our truck to Kampala for
example. However, they only fill ¼ of the truck. Trust is not a very big issue in the village. The chairman of a group is from the village. Most of the times they also have a secretary and a treasurer. A percentage of the sale is saved. They have a joint account after sale from which the association can buy sheets for example to dry the beans. There are two markets: dried on sheet and dried on the ground. 5% of the sales is put on the village savings account and that is also the reason why the farmers can borrow before the harvest s sold. The association provides information about the market prices to the farmer group chairman. The chairman of this farmer group thinks it is nice to provide information about weather conditions. After we visited the farmers group, we went to a smaller farmers group and asked them questions about the association as well. The reason why they joined was because of government policy and it is easier if you get help and work together. You can share information. The changes the second farmer group noticed were: 1. Share with other farmers 2. Quality and quantity increased. 3. They got trainings in how to harvest. 4. The variety of seeds improved 07/08 - Kibinge Coffee Farmers’ Co-operative Society Ltd. The Kibinge Coffee Farmers’ Co-operative Society Ltd. is an cooperation of farmers in the subcounty Kibinge, with around 1250 members. They have a facility to store coffee and to process them before the coffee beans (unroasted) are sold to several international partners. Part of the coffee is UTZ certified. The co-operative also runs a store where farm supplies can be bought and has an office for financial services where money can be saved and borrowed. Cooperative Structure The organisation consists of 48 village level farm group, with each having 25 to 35 members. In every group there is at least a leader, a secretary and a treasurer, which are democratically elected. The farmers subscribe to the co-operative directly and not to the group, but do become part of a group. These groups come together to interact on their problems, to participate in trainings and they can be mobilized in specific circumstances. Above the farmer groups, several ‘promotor farmers’ are active. They more or less work on parish level and take on 3 villages. Their tasks are to: mobilize (new) farmers, provide training and mobilize sale around harvest time. The provide in the communication between the board and the farmers. At the top of the organisation there is a board of directors of 9 people, which are elected democratically every 2 years with a maximum of 2 terms. In the board, different
groups of members will be represented, such as women and the elderly. The co-operative also works together with similar organisations outside of Kibinge. They give trainings together and try to promote drinking of coffee in Uganda itself, in order to expand the domestic market. Communication and training Every group leader has a telephone through which the association can reach him. The phone is however not always efficient, for the electricity is not always reliable. There is a database of phone numbers of individual farmers that the associations intends to use in the future to send bulk SMS. They could contain information about prices and meetings and work to build loyalty between the farmer and the association. All the trainings that the association provides are demand driven. They are giving directly to the farmers, not to the leaders only. Financials Farmers are offered the possibility to save. They can do so in a financial service centre that has been set up alongside the co-operative one year ago, and which seems to work well. Saving goes as follows: the farmers buys some shares of the co-operative (this does not earn him extra votes in the general members assembly). One can save up to a maximum of 1/3rd of his/her working capital. It is also possible to get a loan here. At the start of the co-operative in 1995, there was no money to buy the coffee from the farmers and then sell it. They started with 4 members and convinced them of the following: that the organisation was trustworthy, and that in the long run it would be more profitable to sell collectively. After one month already 25 farmers had joined. The farmers that joined in the beginning were patient people and that had a long-term focus. They were mostly somewhat older and had a positive experience with co-operative of the past. In the beginning the harvest was not sold at a higher price. Younger farmers are only starting to join now, after having seen the positive results. In 2009, the co-operative received a grant from an American association, which made it possible to pay farmers in advance for their coffee beans, store it for a while, and sell later. Because part of the coffee caries the UTZ certification it is easier to get access to loans. At the end of every year the profit is calculated and used for two things. Part will be paid as divided to the farmers (based on the amount of coffee sold), and another part will become part of the assets of the association as retained earnings. These retained earnings are however too small to do investments, which is way the co-operative is looking for loans or grants from Ugandan banks or NGO’s. Plans for future - Diversification of crops such as corn and barkcloth. This will create more income for farmers and different times of the year. It will make them less vulnerable to sell to the middleman in times of financial distress. - Improve farm supply shop, so that there are better inputs to the product.
- Look for new markets to sell to. - Encourage continuous change of farm techniques. Change is however difficult. - Rate the quality of the beans locally instead of in Kampala. - Owning a factory (instead of renting). They have already build a plot of land and it will be close to the farm supply shop and the financial service centre. It will be small at the start, but it will help to build the confidence of farmers and has potential to grow in the future. - In the very far future it might be possible to start roasting the coffee beans themselves. 11/08 - Minister of Agriculture, Animal Industry and Fisheries: Tress Bucyanyandi According to Bucyanyandi, the majority of people are dependent on farming: 30% belong to commercial farmers. Their ministry has a goal to improve the educational system to reach and teach farmers. Their target is to increase their income to 20 million. Their investment plan consists of two parts: 1) Value Addition: Starting from scratch, food processing (there is a loss of value of unprocessed food is sold below value) 2) Agriculture is supported by many industries  Fertilizers  Comprehensive Development Projects in Sukulu, Uganda  Lot of cow diseases: need for vaccinations ad animal drugs The NAADS project is one of the initiatives in 2001 to reach their goal. Its main objective was to transform subsistence farmers into farmers with a business oriented income. It should change the sector from supply to demand driven. Private companies should be contracted out. Farmers that already achieved certain level could reap the benefits of the program, whereas subsistence farmers did not receive the services. Then there was an agricultural decline; growth went down from 6% to 0.7% and there was a public outcry. According to Bucyanyandi, the approach of the programme was not appropriate. The service provision had a poor quality and therefore NAADS collapsed. According to Bucyanyandi it is important to look at the market itself. He said quality should be improved, they should promote their products and not impose restrictions on commodities. Uganda is starting a political union: it removes trade barriers between Tanzania and Kenia 12/08 - Lawrence N Bategeka Introduction Independent consultant for the private sector, entrepreneur with upcoming hotel, former head researcher at the Economic Policy Research Centre, founder of secondary school. David introduced our project and pitched the three ideas as they were before we came to Uganda and as they changed during our research. B. started with telling about the history and development of the Ugandan economy from 1960
to now, stressing the liberalisation of the markets and the following market failures (especially in rural areas) that occurred due to the lacking power of the farmers and the overextensive power of the middle man. Before liberalisation farmers were more organised in associations, but politics broke their structure since the associations were not bound to regulations and only a few people benefited. Cooperatives existed for most sectors, especially for export commodities, and they controlled the market. Since then productivity has gone down due to increasing input prices (like antipestcides and fertilisors), less organised farming and decreased interest of the youth. There is a shift of labour from agriculture towards services and industry. Farmers also do not have money to invest, they can only sell the surplus of the production they do not need for their own livelyhood. The government tried to institute the Plan for Modernisation of Agriculture (PMA) but of the seven pillars only the NAADS programme was implemented due to lack of funding. Farmer groups is an initiative that was set up by farmers themselves to compensate for the lack of association power, however they were too small, unstructured and lacked manegerial expertise to be effective on market level. The middleman could still exploid the small farmers since there were no regulations and the farmers still depended on the middleman for subsistence. EXAMPLE of failing non-regulated liberal market: when an investor gave input to farmers, e.g. seeds, fertilisor and equipment, and the farmers sold back the higher quality products to the association. Now other parties, who can offer higher prices due to the fact that they would not have the investment costs, take the higher quality products and therefor make the initial investment no longer worthwile. Either some kind of loyalty to the association should 'ensure' the return on investment, or the farmers should be empowered to make the investments theirselves. While 60-70% of labour force is working in agriculture (while 90% of the population depend on agriculture), it only accounts for 20% of GDP, while services account for 15-20% of labour force and 60% of GDP. Inequality, measured by Gini coefficient, rose from 30% to 50% due to these disproportionatal parts in the composition of GDP. The mindset of the farmers need to change towards a more marketorientated and businessminded view. This is hard because most farmers are still subsistent farmers that are self employed. Associations (and the infastructure that comes with them) are the start for this change. They can enforce some market power and require farmers to participate in the market process. Also, they can more easily provide in for example storage of harvest or transportation to the city. Youth will come back to the agricultural sector if farming is seen like a business. Associations play large roles in creating market power for farmers and adding value to the crops, as well as protect and/or help farmers as they face challenges. Is it possible to use sleeping cooperatives as a base or is it better to set up new associations? The problem with sleeping associations is that they are mostly institutes that have been used to getting help in the way of grants or micro credits. Therefore their target and the expectation of
their farmers is to get financial support, instead of sharing information and improving themselves in a sustainable way. Furthermore there is a lot of corruption and fraud in the current governance of the sleeping associations. Good leadership is important in associations and if such a sleeping association does have the right base and vision/targets, they can ease the process. Most of the money that is destined for agricultural development in a bad association ends up fixing personal problems instead of being invested in the development. Would the market information system work if you have a good structured cooperative? B. thinks so, and the focus should lie on helping with deciding on the right inputs. Make sure farmers use the right seeds, fertiliser, pesticides etc. Training such as possibly can be given by SIAPROM (or their students) is also an important aspect when improving associations, since educating farmers will improve their willingness to cooperate. On what level should cooperatives be structured? Associations are focussed on two main points, geographic, meaning on which level they are organised, and enterprise, so what they grow and sell. Farmer groups will work on village level, but the association should work on parish/sub-county level. Farmer groups therefore are to be combined into an association. You get an appex structure in which individuals are part of the association whilst in the farmer group (for individual support). If you further improve the structure, in the long term it could give the farmers a policy voice, but only as long as it has been structured bottom-up. How should cooperatives finance themselves/set up an savings account? The intention of forced savings is good, but the association needs good financial governance to make such a structure work. Transparency is important, also because then there can be formed a board that can invest money that has been made with trade. B. said some sort of fee (or part of profits) can be used to invest, but only when there is good financial policy and that is very hard to accomplish on parish level. Shares could work, but there is a thin line between making money and the supporting role an association should have. Special care has to be taken into ensuring no corruption envails in such an environment.